Do Institutions Matter for FDI? A Comparative Analysis for the MENA Countries

Daniele, Vittorio; Marani, Ugo

doi:10.2139/ssrn.917581

Cited by 31 publications

(22 citation statements)

References 16 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…), thus affecting the expected return on investment [2]. The scholars found that institutional quality is significantly positively correlated with FDI, and FDI is more inclined to superior institutional environment [3] [4] [5]. However, the above conclusion is not supported by all studies, Conversely, some scholars found that China's OFDI is better than that in the regions and countries with high political risks and poor institutional quality [6] [7] [8].…”

Section: Literature Reviewmentioning

confidence: 99%

How Institutional Distance and International Experience Affect the Success or Failure of Foreign Direct Investment by Chinese Enterprises?

Yang¹

2019

AJIBM

View full text Add to dashboard Cite

With the sample of 2571 foreign direct investment of multinational enterprises in China from 2005 to 2016, the Logit model is used in this paper to empirically test the influence of host country system differences and international experience on the success or failure of foreign direct investment by Chinese enterprises. Our empirical findings are: the greater the difference in institutional distance (whether positive or negative), the larger the possibility that foreign direct investment by Chinese enterprises will fail, that is, the institutional distance is featured by "symmetric effect" on the success or failure of foreign direct investment by Chinese enterprises; as a "distance bridging" variable, international experience has regulatory effect that weakens the negative effect of institutional distance on Chinese enterprises' overseas direct investment success rate in the negative institutional distance, but has no regulating effect in the positive institutional distance, which is featured by "asymmetric effect"; the adjustment of institutional distance to the success or failure of foreign direct investment by Chinese enterprises has industry characteristics. When Chinese enterprises directly invest in "sensitive" industries, the adjustment effect of international experience on the relationship between negative institutional distance and investment success or failure is less obvious than that in "non-sensitive" industries. In addition, the sample data of foreign investment by China's multinational corporation in the "Belt and Road" countries are examined, which is consistent with conclusions. The research results also show that the host country's dependence on trade, infrastructure and strategic resources are all important factors affecting the success or failure of foreign direct investment of Chinese multinational enterprises. According to the above conclusions, some suggestions and countermeasures are proposed in this paper. KeywordsSuccess or Failure of Foreign Direct Investment, Institutional Distance, International Experience impact of the host country system's quality and differences with the home country system on flows and risks of foreign direct investment, and does not study the success or failure of foreign direct investment; at the same time, scholars are concerned about the impact of the institutional distance between home and host countries on OFDI, but do not distinguish the directivity of institutional distance (i.e., the positive institutional distance that the host country is cleaner than China and the negative institutional distance that the host country is less clean than China). Therefore, this paper studies the impact of institutional differences and international experience on the success or failure of foreign direct invest-

show abstract

Section: Literature Reviewmentioning

confidence: 99%

How Institutional Distance and International Experience Affect the Success or Failure of Foreign Direct Investment by Chinese Enterprises?

Yang¹

2019

AJIBM

View full text Add to dashboard Cite

show abstract

“…His empirical results have shown that what really matters are the rules and games in a society. Daniele & Marani [2006] discuss potential channels through which institutions may affect the level of investment. First, the presence of good institutions tends to improve productivity, and subsequently stimulates investment, regardless whether domestic or external.…”

Section: Institutions and Fdimentioning

confidence: 99%

Institutional Determinants of Investment Inflows into Transition Economies

Victoria¹,

Janíčko²

2015

AOP

View full text Add to dashboard Cite

This article investigates the relationship between institutional quality and the level of investment inflows into post-communist countries. We attempt to empirically verify the argument that institutional determinants are essential in explaining the variation in investment inflows into transition economies after the demise of socialism in the early 1990s. The role of institutions is assessed using Economic Freedom indices provided by the Heritage Foundation. Consequently, to investigate the progress of institutional quality in transition economies, we further employ indicators developed by the European Bank for Reconstruction and Development. Using a panel data set for 11 transition countries from 1993 to 2013, we conclude that the impact of institutional quality on investment inflows is not negligible, yet much weaker than suggested by the existing theoretical literature. Using a fixed-effects model framework in both regression benchmarks with metrics from the Heritage Foundation and the European Bank for Reconstruction and Development, respectively, we observe that the impact of institutional variables on the level of investment was less significant than expected. Moreover, macroeconomic fundamentals appear to always play a more substantial role than institutional factors.

show abstract

“…During the nineties, FDI represented an average of 0.9% of the GDP in MENA countries, against 2.5% in African countries, 3.8% in Eastern Asia and 4.5% in Latin America (Sekkat 2004). A few years later, and despite a fast increase of the FDI inflows to Tunisia, Morocco and Egypt, such a weakness in attracting investment was still underlined by the studies of Chan and Gemayel (2004), Iqbal and Nabli (2004), Sekkat (2004) or Daniele and Marani (2006). In addition, Iqbal and Nabli (2004) or Noland and Pack (2007) also showed that the degree of integration to the global production chains is very limited in spite of the closeness to the European market.…”

Section: Introductionmentioning

confidence: 99%

“…11 Cross-sectional studies have not produced particularly consistent evidence about what explain both the poor performance of MENA countries in attracting FDI and the weakness of the spillover effect from FDI. Furthermore, the weakness of the legal and administrative environment in the MENA countries has been underlined as a major hindrance to growth by the recent surveys of Alessandrini (2000), Daniele and Marani (2006), Chan andGemayel (2004), Be´nassy-Que´re´et al (2005) or Sekkat (2004) that all underline the necessity of furthering the reforms in that field.…”

Section: Introductionmentioning

confidence: 99%

New exports matter: Discoveries, foreign direct investment and growth, an empirical assessment for Middle East and North African countries

Nicet-Chenaf

Rougier

2011

The Journal of International Trade & Economic Development

View full text Add to dashboard Cite

Export diversification has become a priority goal for the development of the Middle East and North African (MENA) countries. In this article, we aim at measuring both the effects of exports' diversification on growth in MENA countries and the way new exports and foreign direct investment (FDI) interact with each others in the process of growth. Although the effects of FDI on growth have been scrutinized by numerous studies up to now, the effects of diversification and discoveries in export have only very recently been assessed. But no one has made explicit the way FDI and export discoveries interact in the growth process. A model is estimated by the system-generalized method of moments and we provide robust evidence that export discovery and FDI stimulate gross domestic product (GDP) growth in our sample of countries, and that FDI does not necessarily have the same effect on growth according to the level of discovery of the country. We also show that the joint positive effect of new exports and of imports suggest that technological spillover from import but also from the integration to global value chains are likely to occur in our sample of countries.Export diversification, FDI, growth, MENA, GMM system,

show abstract

Do Institutions Matter for FDI? A Comparative Analysis for the MENA Countries

Cited by 31 publications

References 16 publications

How Institutional Distance and International Experience Affect the Success or Failure of Foreign Direct Investment by Chinese Enterprises?

How Institutional Distance and International Experience Affect the Success or Failure of Foreign Direct Investment by Chinese Enterprises?

Institutional Determinants of Investment Inflows into Transition Economies

New exports matter: Discoveries, foreign direct investment and growth, an empirical assessment for Middle East and North African countries

Contact Info

Product

Resources

About